Approaching faster than you realized, Bitcoin’s next halving is just around the corner, and marks a pivotal moment for Bitcoin from a scarcity standpoint, as its stock to flow ratio will surpass that of gold.
1. Bitcoin is boring – and it’s a good thing!
Google searches for crypto were at multi-year lows at the end of 2023, retracing the entire 2020-2021 bull market – and seem to be continuing in the same vein. This is important! It reflects declining interest in the space; which for those who have stuck around this long and hold belief in the asset class marks a major opportunity. As Warren Buffett says, “it is often prudent to be fearful when others are greedy, and greedy when others are fearful.”
Past performance is not an indication of future results.
2. More boring than you thought…
Volatility continues to spike and retrace. One way to illustrate this is through looking at Bollinger bands, which represent how tight volatility has become and where price is trading relative to recent price history. The width of Bitcoin’s weekly Bollinger bands is about the tightest that it has ever been on record.
Past performance is not an indication of future results.
3. The AVIV ratio – valuing Bitcoin
One valuation metric that we have not yet discussed is AVIV ratio. Published by Ark Invest and Glassnode, this compares the active capitalization of Bitcoin to its investor capitalization.
In simple terms, this represents the amount of active supply relative to the amount of supply held by investors. Spending roughly 50% above and below a value of 1, the mid-point of this ratio serves as the true mean of the Bitcoin network. The mid-point metric shown below illustrates that Bitcoin is no longer at the levels of deep value reached at the back-half of 2022 following the FTX blow-up but is far from levels that have historically marked overvaluation.
Past performance is not an indication of future results.
4. Supply distribution – another positive trend
To wrap things up with some fundamental data, the percentage of Bitcoin’s supply held by entities with less than 10 Bitcoin continues to push to new highs, representing a continued positive trend in Bitcoin’s supply distribution over time.
Learn more about the Halving.
The material in this blog post was created exclusively for eToro by Reflexivity Research.